The ACT Party is invoking the "agree to disagree" provision in its Coalition agreement with National because it doesn't support the just-announced Fair Digital News Bargaining Bill.
Broadcasting Minister Paul Goldsmith announced on Tuesday the Government would progress the Bill with amendments to "support our local media companies to earn revenue for the news they produce".
The announcement comes ahead of Newshub's closure on Friday, and state broadcaster TVNZ posting big financial losses.
In a statement, ACT leader David Seymour said the Bill was "a failed Labour inheritance our partners just can't shrug off".
He said progressing the legislation was "one of those things you do when you don't know what else to do".
Supporters of the Bill estimated it may only provide $30 million in revenue to New Zealand's media companies, Seymour said.
"The Fair Digital News bargaining Bill will not solve the fundamental challenges facing traditional media: it's never been easier to share information online but people don't want the product on offer."
It was unlikely to change the reality facing media companies, Seymour believed.
"Media companies claim they need the Government to step in because internet companies are exploiting them. In my experience, it's not always clear who needs who the most. Media firms get traffic from Google and Meta, they can't prove they're not benefiting from the internet firms."
Seymour said ACT believed the Bill doesn't "add up to a game changer".
"ACT worries that a Bill aimed at subsidising traditional media could undermine the separation between political actors and journalists who are meant to be an independent voice in our democracy."
The legislation was first introduced by the former Labour Government and would require social media platforms that make use of news to strike deals with media outlets to pay for the content.
In a separate statement, Goldsmith explained why the Coalition was progressing the Bill.
"I have looked closely at the design of the legislation and will be changing the approach to align more closely with the Australian digital bargaining code to give all companies greater certainty.
"The key change is adopting a ministerial designation framework. This will enable the minister to decide which digital platforms are captured... allowing the Government to manage unintended consequences," Goldsmith said.
In addition, the Government would start removing "outdated" advertising restrictions for Sundays and public holidays, he said.
"The Government will also tweak the eligibility criteria for the New Zealand Screen Production Rebate for local shows with strong industry and cultural value, like our longest-running drama Shortland St.
"Finally, I have spoken to NZ On Air about the role it can play in supporting local news and current affairs. They have committed to reporting back to [the] Cabinet on progress by the end of the year."
It's the second time in a week the Coalition Government's hasn't seen eye to eye on policies. Last week, New Zealand First invoked its agree to disagree provision over the COVID-19 Royal Commission of Inquiry.
